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UPDATE: Gerry Harvey wants a GST on online shopping. Do you?

Late last year, Chief Executive of Harvey Norman, Gerry Harvey started to get a little antsy. He complained that local retailers were under threat from online stores and called for online purchases from overseas to be taxed.

Not surprisingly, he found fast support from the major retailers (who also claim to be affected by online retailing) to call for the government to impose a GST on online products that cost under $1000 and to do it fast.

Julia Gillard called for the Productivity Commission to conduct an inquiry “into the impact of globalisation on the retail industry, including the growth of online shopping” The report is due back later this year. But that is not quick enough for some:

Harvey Norman’s outspoken chairman, Gerry Harvey, has claimed many retailers will perish unless immediate action is taken to add GST onto Internet transactions of under $1000.

Speaking at a press conference surrounded by stocktake sales shoppers in Sydney’s CBD, Harvey said the GST imbalance would cost Australian jobs if not rectified as soon as possible.

“There are a lot of retailers that are going to go broke between now and the next three months,” Harvey said. “This has been taken to the Productivity Commission, which will take nine months to look at it and then make a recommendation to the Government.

It is interesting to note that Harvey Norman does not actually have an online retail offering . This is interesting because if they did, perhaps people who LIKE to shop online for the convenience factor, might spend their $$$ there instead of overseas. Just a thought.

A group of major retailers including Harvey Norman, Myer, David Jones, Target, House, Borders and Angus & Robertson have taken to the national newspaper with full page adverts trying to raise support for this new GST.

In the ads, the retail coalition, which collectively employs more than 76,000 people, warns that failing to act “will see a reduction in hours and shifts for casual and part-time workers, and ultimately cost Australians jobs in retail, manufacturing, logistics and related services”.

The reaction to this advert has been resounding with #deargerryharvey trending on Twitter and very little support going to the major retailers. The Courier Mail reports:

Mr Harvey was unimpressed by the argument, accusing Mr Shorten of being out of touch.

“Bill, wake up,” he said.

In the same publication Christopher Zinn, spokesman for consumer advocacy group Choice described the retailers’ campaign as an “alarmist red herring” driven by self interest.

“The big chains should recognise that it’s their high prices, limited range and poor customer service that increasingly encourages people to use the internet,” spokesman Christopher Zinn said in a statement. “Consumers are simply chasing the best deal and the best service and often these days that is found online.”….

“Major stores are not being forced by anyone to charge these high prices,” Mr Zinn said. “This debate is about quality of service, competitive pricing and the inability of some retailers to understand the future of internet shopping.”

And the Australian reports independent senator Nick Xenophon disagreeing with the major retailers in favour of small business

#deargerryharvey

INDEPENDENT Senator Nick Xenophon says imposing the GST on all internet purchases would be an administrative nightmare and highly impractical.

The South Australian Senator instead argues that the current exemption on internet purchases under $1000 from GST should be extended to small businesses. He said it was “extraordinary” that a coalition of big retailers were preparing a campaign designed to pressure the government to impose GST on all goods bought over the internet.

Retailer Gerry Harvey says he is not stepping down from the campaign to have a GST placed on overseas online purchases.

Newspaper reports suggested he was retreating from the tax fight because of the criticism and personal attacks he has attracted from consumers.

With such a fraction of total retailing coming from overseas websites, is this really an issue? Clearly, the big players think that it is likely to grow as a share of the whole retail pie and they’re worried. Are these major retailers out of touch with the way people want to shop in 2011? Do you shop online much? What kind of things do you buy? Is it simply a lack of good service in the form of competitive local websites that can offer the same kind of prices and service you can get from overseas?